UBS: A Century of Data Proves Economic Fundamentals Are the Core Driver of Markets

Odaily News UBS Group analysts noted in a report that data dating back to 1900 shows that economic risks have proven to be more significant for financial markets than geopolitical risks. They stated that in most cases, investors perform best if they can "see through" the noise of geopolitics. The analysts said: "Through a simple regression analysis of future global equity returns and the geopolitical threat index, we found no correlation between the two, whether the perspective is one month or one year." However, geopolitical risks are clearly crucial when "extreme events with significant economic impact" occur. The analysts cited examples including World War I, World War II, and the oil crisis from 1973 to 1974. But they pointed out that such events are "relatively rare," and historically, economic risks have always been more important for investors. (Jin10)